Stage set for future carbon tax showdown

Nick Perry

No sooner had the carbon tax been abolished in the Senate on Thursday than Labor leader Bill Shorten was vowing to take an emissions trading scheme to the next election.

Prime Minister Tony Abbott celebrated the repeal as a great day for Australian businesses and families but warned that not everybody had got the message.

"We've just scrapped the carbon tax, and Bill Shorten is still committed to it," he told reporters in Canberra.

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"Whatever it's called, it's still a tax and the Australian people don't want it."

Labor and the Australian Greens didn't have the numbers in the Senate to block the repeal, which passed with the support of the Palmer United Party and other crossbenchers after a marathon debate.

Soon after, Mr Shorten conceded Labor made a mistake introducing a carbon tax instead of an ETS in 2012.

But far from walking away from the policy, he pledged Labor would take it back to voters.

"I do believe that an ETS argued through, learning the lessons of the past, communicating with Australians, with business - people are up for that," he told reporters.

The repeal was warmly welcomed by farming, industry and mining groups which praised the Senate for lifting the "dead weight" of the tax from Australian business.

Conservation groups were scathing, warning history would judge those who backed the repeal.

The government may be focusing on Labor but its real challenge lies in securing support from Clive Palmer for its alternative climate change plan.

The PUP leader has described its direct action plan as a "waste of money" and could pose a problem when the policy eventually reaches the Senate.

Environment Minister Greg Hunt is confident the upper house will legislate the $2.55 billion policy.

"We have a plan A and we're sticking with plan A," he told reporters.

It's not clear how the government will meet Mr Palmer's other trade-off for backing the repeal - that a "dormant" ETS is established in case Australia's trading partners take similar action in the future.

Mr Abbott said his government would never do anything that damages the economy or puts Australian businesses at an unfair disadvantage.

"We stand up for Australia," he said.

While the Greens called the abolition of the tax a "monumental blunder", retail and energy bodies say consumers will benefit.

Australian National Retailers Association chief executive Margy Osmond says supermarkets will pass back to customers any savings they reap from the tax change.

"In a highly competitive market, these major retailers will do the right thing," Mrs Osmond said.

And Energy Supply Association of Australia chief executive Matthew Warren said power companies could pass savings on quickly.

Australia's largest power company Origin expects to lower electricity bills by seven per cent and gas prices by five per cent, with households to see the benefit in their power bills from September.

Mining employers also welcomed the repeal, saying it's the first of several measures needed to restore Australia's international competitiveness.